Non-bank lenders redefining home lending model

The $2.2 trillion home loan market in Australia is undergoing a profound transformation as mortgage brokers and resurgent non-bank lenders outpace lending by traditional banks, which dominated the market for decades. And it’s driving innovation in the industry.

More than 78 per cent of all new loans are now written by brokers, according to the Mortgage and Finance Association of Australia. This dramatic change signals the progressively weakening hold of the big four banks, as customers look elsewhere in the competitive lending market. They can choose between more than 100 non-banks, fintech companies, credit unions and other lenders.

Non-bank lenders are “redefining access to credit” by creating innovative lending policies, says Tanya Sale, CEO of Outsource Financial, one of Australia’s biggest mortgage aggregators with 1200 brokers under their umbrella.

“The non-banks are filling the gaps left by the [big four] traditional banks, which only have a cookie-cutter approach,” she says. “The non-banks have flexible policies. Their main focus is customer support and fast turnaround on loan decisions.”

As a mortgage aggregator – the crucial back-office support for brokers that handles compliance and lender liaison – Sale has seen this migration firsthand. One in five loans Outsource Financial is involved in are from non-banks, up from one in 10 last year.

Original article from afr.com